Tax Planning

Cuba: Economic Reforms Bring Opportunities—but NOT for U.S. Citizens

I just returned home from a visit to the Republic of Cuba and I couldn't help but to notice that change was in the air. The government is serious about liberalization, and is gradually changing numerous laws, rules, and regulations to help spur economic growth. I welcome these changes, as they bode well for business opportunities in Cuba.

The most dramatic changes relate to property ownership. Cubans may now buy and sell automobiles without first obtaining a government permit. They may also buy and sell their homes without restriction, although a 4% transfer tax applies.

There is also much discussion about making it easier for Cubans to travel abroad. Ordinary Cubans want to scrap the hated Permiso de Salida (Exit Visa) so they can more freely visit friends and relatives in other countries. And, from my contacts in the country, the government may be listening.

Another change I noticed is more Americans in Cuba since my last visit. I recall visits in 2007 and 2008 (during the second administration of George W. Bush) where I didn't see any Americans at all. The Obama Administration has made it somewhat easier for U.S. citizens to travel to Cuba, through its so-called "people to people exchanges." Through the end of July 2011, the Treasury Department issued nearly 30 licenses to organizations that say they will provide "purposeful travel" to Cuba. This will supposedly encourage U.S. citizens to help ordinary Cubans in “support of their desire to freely determine their country’s future."

However, numerous obstacles remain to free movement between the United States and Cuba. U.S. citizens must still obtain a "license" from the U.S. Treasury to legally visit Cuba. The licensing process is now liberalized, but the political regulations prohibiting sale of most Cuban products in the United States remain in place. Even foreign subsidiaries of U.S. companies are forbidden to trade with Cuba, with the exception of certain "humanitarian" items.

Contrast the economic liberalization in Cuba to events in the United States. TSA agents now roam throughout the United States, searching for subversive citizens. The U.S. Treasury has embarked on a vendetta against any U.S. taxpayer with offshore financial accounts. Prosecutors use the Patriot Act tens of thousands of times annually to obtain Internet and telephone records from U.S. companies, without bothering to obtain a warrant. The U.S. Justice Department even claims it has the right to attach a tracking device to your car, without a warrant, and follow you everywhere you go.

It appears to me that the United States will pass Cuba….but going in the opposite direction.

More than a decade ago, I acquired economic citizenship in the Commonwealth of Dominica. Shortly thereafter, I made the decision to give up my U.S. citizenship and passport. Expatriating from the United States has led to both an increase in my personal freedom and my economic opportunity. For instance, since I'm no longer a U.S. citizen, I'm free to visit, do business in, or invest in Cuba, without applying for a license from the U.S. Treasury.

Is expatriation for you? Contact us to learn more.

(P.T. Freeman is a pseudonym for a friend and business associate who is a former U.S. citizen.)

(An earlier version of this post was published by The Sovereign Society,

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